Nigeria’s manufacturing sector is increasingly turning to locally sourced raw materials as the impact of the naira devaluation and persistent foreign exchange scarcity reshapes supply chains across the country.
The shift follows the Central Bank of Nigeria’s decision to float the naira in 2023 under President Bola Tinubu’s reform agenda. While the move was aimed at attracting investment and correcting market distortions, it triggered significant volatility in the currency market, leaving manufacturers scrambling to secure dollars for critical imports.
The Manufacturers Association of Nigeria (MAN) estimates that more than 800 companies shut down in 2024 due to soaring input costs and shrinking access to foreign exchange. For those that remained, the sharp depreciation of the naira forced a rapid rethink of supply chain strategies.
Multinationals such as Procter & Gamble, Unilever, GlaxoSmithKline, and PZ Cussons scaled back operations, while others began adapting by cutting dollar reliance.
At Chemical and Allied Products (CAP), executives disclosed that up to 90 percent of calcium carbonate – a key ingredient in paint production – is now sourced locally, compared to previous imports from South Africa, Egypt, and Tunisia.
According to CAP, this shift has reduced costs by nearly 60 percent in the ten months to June 2025, preventing further price hikes.
“If we had not taken this measure, we would have had to increase pricing by an additional 50 percent,” said Chief Executive Officer, Bolarin Okunowo.
Industry data shows that the use of local raw materials in manufacturing increased to 57.1 percent in 2024, up from 52.1 percent in 2023.
Other companies are finding creative ways to mitigate exposure to FX risks. Beta Glass, which uses soda ash for glass manufacturing, has stopped direct imports. Instead, it works with international suppliers who bring the product into Nigeria and issue invoices in naira, insulating the company from dollar shortages.
“Using hard-won dollars to source raw materials felt like working for the banks,” said Chief Executive Officer, Alex Gendis, citing high lending rates that make dollar-based procurement unsustainable.
While the pivot to local sourcing has eased immediate cost pressures, manufacturers warn of capacity limitations among local suppliers. Persistent issues such as unreliable electricity supply, poor transport infrastructure, and regulatory uncertainty continue to undermine production efficiency.
Economists note that while the shift to local raw materials has improved resilience, broader structural reforms are needed to support long-term competitiveness.
“Most manufacturers are becoming more innovative with how they procure, process, and distribute materials,” said Dumebi Oluwole, economist at Lagos-based Stears. “But without addressing infrastructure and regulatory bottlenecks, the benefits will remain limited.”
The sector’s rapid adaptation highlights both the vulnerability and resilience of Nigerian manufacturers in a volatile macroeconomic environment. Analysts say further gains can be unlocked if government policy supports local producers, reduces infrastructure bottlenecks, and ensures regulatory clarity.
For now, the shift away from imports is helping many firms remain afloat, cutting costs and preserving market share, even as foreign exchange volatility continues to challenge Africa’s largest economy.
